Subsidy retreat more than 50%, BAIC new energy can

Recently, the 2019 new energy subsidy policy officially announced, more than 50% of the decline, to China's new energy automotive industry caused a shock. At the same time, local government subsidies for the purchase of new energy vehicles have been eliminated. The main changes were, first, the increase in subsidized mileage and the elimination of all subsidies for electric vehicles with a range of less than 250 kilometres; The subsidy for electric vehicles with a duration of 250 km or more and less than 400 km was 18,000 yuan, down 60%; The subsidy of more than 400 kilometers was also reduced from 50,000 yuan to 25,000 yuan. In addition, plug-in hybrid model subsidies of 10,000 yuan, down 55%. The new policy gives a three-month transitional period during which sales of licensed vehicles that do not meet the requirements of the 2019 technical indicators but meet the requirements of the 2018 technical indicators will be subsidized by 0.1 times the corresponding standard under the 2018 subsidy policy; Sales of licensed vehicles that meet the requirements of the 2019 Technical Indicators will be subsidized at 0.6 times the 2018 equivalent standard. Here's an example of how considerate you can be. An electric car with a 400-kilometer range will receive 75,000 yuan in subsidies under the 2018 policy, including 50,000 yuan in state subsidies and 25,000 yuan in land subsidies, compared with 25,000 yuan under the latest policy in 2019, which means the subsidies will be directly reduced by 50,000 yuan. In the past, it is an indisputable fact that China's new energy industry has developed rapidly by means of large subsidies, licensing restrictions and other measures. China sold 1.25 million new-energy vehicles in 2018, compared with 2 million worldwide, with China accounting for Again, more than half of global sales, at 62.5%. This year is bound to be a watershed year, and it is no exaggeration to say that 2019 will be a life-and-death year for many new energy companies. BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING-BEIJING NEW ENERGOVERGE is facing bad news. Taking BAIC New Energy EC3 as an example, the operating range of 261 km can be subsidized by about 56,000 yuan in 2018, and the highest subsidy can only be subsidized by about 18,000 yuan in 2019. The EC series seems doomed to a "dead end". In January 2019, the EC series, which had been ranked among the top three in sales, disappeared from the list and was replaced by the EU series, but the series does not seem to be able to make up for lost sales. At present, BAIC new energy is in a period of "green and yellow". Overall sales of BAIC's new energy brand also plummeted, with 4,512 vehicles sold in January, down 43.66 per cent from a year earlier. In February, it produced only 500 new-energy vehicles, down 92% from a year earlier, and sold 2,867 new vehicles, down 34% from a year earlier. BAIC ranked 11th in the first two months of this year, with BYD topping the list, according to BAIC's favorite global vision of new energy. In the past, A00-class cars (such as the EC series) were the absolute mainstay of BAIC's new energy sales structure, with many models priced as low as Rmb50, 000 after subsidies. In 2018, EC Series sold more than 90,000 vehicles, accounting for 57.36%. With its own low prices and new energy subsidies, EC Series Column has undoubtedly become a sharp weapon for beijing automotive new energy to impact sales. Today, such an era is officially over. In the "pre-subsidy era", BAIC New Energy has made great strides since its establishment in 2009, winning the sales championship of pure electric vehicles in China for six consecutive years. Beijing Automotive New Energy sold 158,000 new cars in 2018, up 53.11% from a year earlier, surpassing its annual sales target of 150,000, according to the data. On the success of new energy market, beijing automotive new energy. Data show that in 2017, BAIC New Energy receivable state subsidies of 2.771 billion yuan, receivable local subsidies of 2.188 billion yuan, a total of 4.959 billion yuan. BAIC New Energy sold more than 100,000 pure electric vehicles that year, up more than 98 per cent from a year earlier, becoming the first pure electric vehicle company to sell more than 100,000 vehicles in China. It is said that BAIC New Energy has an internal policy research and judgment strategy department, and the product design will be based on the results of the department's research. BAIC New Energy and BYD are two giants competing to dominate the market, maintaining the pattern for many years, the two sides represent two very different new energy strategies, BYD is like a man of engineering and technology image of hard work, while BAIC New Energy is more like an extroverted communicator, has a very vibrant mind. Over the past few years, BAIC New Energy, which mainly produces minivans, seems to have put more hope on business model innovation, hoping to increase the attractiveness of electric vehicles by shifting value and financial instruments in the industrial chain. Such an approach now seems to work only in certain commercial markets. Soon after the New Deal, BYD announced that the price of its new-energy vehicles would remain unchanged. Relevant spokesman said that BYD will effectively dilute the research and development and production costs through such measures as the core technology reserve of the entire industrial chain, rich model series and model matrix (dynasty series, e-series), opening and sharing of e-platform, etc., and has made full preparations for adapting to the new environment. At that time, BAIC New Energy seems to have a lot less base, do not rule out product prices for adjustment. Xu Heyi, BAIC chairman, said the new policy would urge him to move forward. "New energy vehicles that rely on subsidies are going to have a hard time in the future, and it's going to be a big problem to survive. After all, no amount of subsidies can make up for the hematopoietic capacity." Ma Fanglie's Worries Beijing Automotive New Energy's first gifts to its new general manager Ma Fanglie are "sales of more than 7,000 vehicles in two months", "sales target of 220,000 vehicles in 2019" and many mines left over from the era of Zheng Gang. BAIC must have anticipated a decline in both production and sales ahead of the new policy, with officials explaining that adjustments have been made to the product mix to ensure the supply of high-quality models. BAIC New Energy said: "Due to the discontinuation of some low-end models, and new explosive model EU5 production problems, sales have declined, EU5 normal delivery after sales will gradually become normal." BAIC New Energy also proposed at the Partners' Conference earlier this year that it will focus on the new generation of mid-and high-end products such as EX5, EX3 and EU 5 in 2019, and will account for a proportion of sales of Class A vehicles for the whole year. Adjusted to 50%. For long-term competition, the core competencies should also fall on products. If the product itself is not competitive enough, then finance, services, these business model innovations are on paper. As Ma Fanglie said, "Without the strength of the carrier, it is difficult for enterprises to have core competitiveness. So at this stage we'concentrate 'to enhance product competitiveness." Although this is true, this courage is also touching. However, the low-end was mercilessly eliminated, the high-end product market is not yet mature, scraping the bone therapy-like "upward" is not so easy. BAIC New Energy is not only facing the problem of irrational product structure. From low to high, BAIC New Energy first asks how much technology it has to support its brands? In BAIC Langu's January-September 2018 earnings report, BAIC's total revenue from new energy operations was Rmb9.787bn, with only Rmb10.67m spent on research and development, accounting for about 0.1 per cent of total revenue. In sharp contrast, BYD spent 5.21728 billion yuan on new-energy vehicles and batteries in 2018. At the same time, BAIC New Energy also faces the problems of quality and after-sales service. From January to December 2018, China sold 1.008 million new energy passenger vehicles and recalled 135,700, according to the State Administration of Market Regulation. Among them, BAIC New Energy ranked first with 69,000 recalls, accounting for about 51.1% of total recalls of new energy vehicles in 2018. It is worth mentioning that with the transition of new energy vehicles to a more gold-rich 2.0 era BYD, SAIC, Geely, Great Wall and other independent head companies have also made new performances, which also pose new challenges to BAIC. According to the plan of "Wei Lan Career Plan 3.0" of BAIC New Energy, BAIC New Energy will realize the strategic goals of "two world-class" of world-class science and technology innovation center and world-class new energy automobile enterprise in 2025, and become the first pure electric vehicle brand in China and the top three in the world. For now, BAIC's sales target of 220,000 vehicles may well become empty talk in 2019, the year the auto maker fully implements its "two-wheel drive strategy" of new-energy and smart-network connectivity. BAIC New Energy to "upgrade" or "Clothes Tomb", given its choice is not many. But I hope it can firmly choose to "upgrade", although difficult but firm, although nine dead still not regret. When you look at the abyss, the abyss looks at you. Good luck!